A STUDY ON FINANCIAL PERFORMANCE

AT
MITSUBISHI HEAVY INDUSTRIES INDIA PRECISION TOOLS
LIMITED, Ranipet.

A Project Report
Submitted in partial fulfillment of the requirements for
The award of the degree of Masters of Business Administration

By
R. VIJAYAVARMAN
14MBA0146

Under the Guidance of

Dr. Sumathy
Professor.

JULY 2015

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CERTIFICATE

This is to certify the Project report submitted by Mr. R. VIJAYAVARMAN Reg. No.
14MBA0146 to VIT Business School, VIT University, Vellore in partial fulfillment of the
requirement for the degree of Master of Business Administration is a bonafide record of work
carried out by him under my supervision. The contents of this report, in full or in parts have not
been submitted in any form to any other institute or university for the award of any degree or
diploma.

Faculty Guide

Program Chair

Internal Examiner

External Examiner

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DECLARATION

I, R. VIJAYAVARMAN (14MBA0146) is a Bonafide student of the VIT Business School, VIT

University, Vellore, hereby declare that the project report submitted in partial fulfillment of the
requirements of the degree of Master of Business Administration of the VIT University, is my
original work.

Date:
Place: Vellore

Name of the student

R. VIJAYAVARMAN

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CONTENTS
PARTICULARS

PG.NO

CHAPTER I
1.1

INTRODUCTION

1.2

NEED FOR THE STUDY

1.3

SCOPE OF THE STUDY

1.4

OBJECTIVES OF THE STUDY

1.5

LIMITATIONS OF THE STUDY

10

CHAPTER II
2.1

REVIEW OF LITERATURE

11

CHAPTER III
3.1

INDUSTRY PROFILE

21

3.2

COMPANY PROFILE

23

3.3

PRODUCT DETAILS

25

CHAPTER IV
4.1

ANALYSIS AND INTERPRETATION

32

4.2

COMPARISON OF BALANCE SHEET

44

CHAPTER V
5.1

FINDINGS

51

5.2

SUGGESTIONS

52

5.3

CONCLUSION

53

BIBLIOGRAPHY

54

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ACKNOWLEDGEMENT

I am very much obliged and indebted to Mr . V .S .JANARDHANAN, Vice President ( HRD ) of

Mitsubishi Heavy Industries India Precision Tools Limited for his Approval and valuable
suggestions to take up the project.
I also offer my gratitude to Mr. S. Srinivasan., Director Operations, approval and valuable
suggestions to take up the project in Mitsubishi Heavy Industries India Precision Tools Limited.
I express my deep sense of recognition to Mr M.A Dhanasekran, General Manager (EDD) for his
valuable guidelines, continuous help and personal interest during my project work.
I am also thankful to Mr. Manju Nathan, Mitsubishi Heavy Industries India Precision Tools
Limited. for his support and suggestions during the project.
I am very pleased to express my deep sense of gratitude to Mrs. Sumathi., Associate professor
for her consistent assistance. I shall forever cherish my acquaintanceship with her for exuberant,
limitless approachability, veritable freedom of thought and actions I have appreciated for the
duration of the project.

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CHAPTER 1
1. Introduction and design of study
Financial management is very important for every company which is concerned in
growing and stabilizing their position. Financial management involves several key steps such
financial performance analysis, finding out financial distress signals and finding out solutions for
the problems.
The term financial performance analysis also known as analysis and interpretation of
financial statements, refers to the process of determining financial strength and weaknesses of
the firm by establishing strategic relationship between the items of the profit and loss account,
balance sheet and other operative data.
Financial performance analysis is the method of determining the relationship between
components parts of financial statement to obtain a better understanding of a firms position and
performance.
The objective of financial analysis is to identify the facts contained in financial
statements so as to judge the profitability and financial stability of the firm. Just like a physician
examines his patient by tracking his body temperature, blood flow pressure etc. Before making
his conclusion regarding the illness and before giving his approach. A financial analyst analyses
the financial statements with a variety of tools of analysis prior to commenting upon the financial
strength or weaknesses of an enterprise.
The analysis and understanding of financial statements is vital to bring in the enigma
behind the figures in financial statements. Financial statements analysis is an effort to find out
the importance and meaning of the financial statement data so that prediction can may be made

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of the future earnings, their ability to shell out interest and debt (both ongoing and long term) and
profitableness of a strong dividend policy.
Financial performance relates to the act of carrying out activity that is financial. In wider
sense, financial performance relates to the extent to which financial objectives being or has been
accomplished. It is the approach of measuring the results of a firm's policies and operations in
monetary terms. It is used to evaluate firm's overall health that is financial over a given period of
time and can also be used to analyze similar firms across the industry that is same to compare
businesses or sectors in aggregation.
The term financial statements refers to two basic statements: They are balance sheet and the
income statement.
Balance Sheet
The balance sheet shows the financial state (condition) of the firm at any given point of
time. It provides a snapshot and may be regarded as a static picture.
Balance sheet is an overview of a firm's financial position on a given date that Shows total
assets = total liabilities + owner's equity.
Income Statement
The Income statement (mentioned in India as the profit and loss statement) reflects the
efficiency of the firm over a period of time.
Income statement is an overview of a firm's revenues and expenses over a particular period,
ending with net income or loss for the period.
Although, financial statements do not reveal all the information related to the financial
operations of a firm, but they furnish some extremely useful significant information, which
highlights two significant factors profitability and financial soundness. Thus analysis of financial
statements is a significant aid to financial performance analysis. Financial performance Analysis
includes analysis and interpretation of financial statements in such a real way that it undertakes
diagnosis that is full of profitability and financial soundness of the business.

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According to Metcalf and Titard

The analysis of financial statements is a process of evaluating the relationship between
component parts of financial statements to obtain a better understanding of the firm's position
and performance.

1.1 NEED FOR STUDY:

Need of financial management study is to diagnose the information contained in
financial statement so as to judge the profitability and financial position of the firm.
It is highly beneficial to management of the business by providing crystal clear
picture regarding vital aspects like liquidity, leverage, activity and profitability.
The study is beneficial to employees and provides motivation by displaying how
actually they are contributing for organization's growth.
The study has great importance which provides benefits to various parties whom
directly or indirectly interact with the company.

1.2 SCOPE OF STUDY:

This study helps the firm to find out the dull areas for making improvement in its
financial performance.
The business must be able to learn about its position for future time.
The employers should know their corresponding contribution to the performance of
the company.

1.3 OBJECTIVES OF THE STUDY:

The main objective of the study is to evaluate the financial strength and weakness
of MITSUBISHI HEAVY INDUSTRIES INDIA PRECISION TOOLS LIMITED.

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The main objective of study aimed as:

To evaluate the performance of the business by using balance sheet, income statement, ratios,
etc., as a standard to measure the efficiency of the company. To understand the profitability,
liquidity and efficiency positions of the company during the study period. The main idea is to
measure and analyze various facts of the financial performance of the business.

OBJECTIVE:

To find out the liquidity position of the Company.

To understand the financial statements of Mitsubishi heavy industries India

precision limited.
To understand the financial health of the firm using ratio analysis.
To identify the profitability position of the Company.
To find out the debt maintaining capacity of the company.
To offer recommendations and ideas to the company.

1.4 LIMITATIONS OF STUDY

The below mentioned are some constraints under which the project study is carried out.
TEMPORARY REPORTS:
Only temporary statements, they don't give a complete picture of the issue. The data given in
these statements is only an estimated value. The exact situation can only be found out when the
company is sold or liquidated.
DONT GIVE OUT EXACT POSITION:
The financial statements are declared in money values, they are designed to provide absolute and
accurate position. The worth of fixed assets within the balance sheet neither describe the value

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for which fixed assets will probably be sold nor the money that will be needed to replace these
properties.
HISTORIC DATA:
The financial statements are developed on the grounds of historical costs or original costs. The
economic value of assets reduces with the time but current price changes are not taken into
consideration. The statements are not developed keeping in mind about the current economic
conditions. The balance sheet seems to lose the importance of being an list of current economic
realities.
NON MONETORY FACTORS ARE ABSENT:
There are several elements which have a impact on the financial position and operating outcomes
of the business but they don't become a part of these statements simply because they can't be
measured in monetary terms. One example of such a factor is reputation of the company.
Time was also a pressing constraint. The entire study was performed in a period of 45
days, which is not adequate to carry out proper interpretation and research.

CHAPTER 2
REVIEW OF LITERATURE:
2.1 FINANCIAL PERFORMANCE ANALYSIS:
INTRODUCTION:
The term financial performance analysis also known as analysis and interpretation of
financial statements , refers to the process of determining financial strength and weaknesses of
the firm by establishing strategic relationship between the items of the profit and loss account,
balance sheet and other operative data.
Analyzing financial statements by Metcalf and Titard

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Financial analysis is a process of evaluating the relationship between component parts of a

financial statement and to obtain a better understanding of a firms position and performance by
Myers.
Financial performance:
Financial performance denotes the act of carrying out a financial activity. In more diverse
sense, financial performance denotes to the extent to which financial objectives being or has
been achieved. It is the process of measuring the results of a firm's guidelines and operations in
financial terms. It is used to assess firm's overall financial fitness over a given period of time and
can also be used to compare similar businesses across the same industry or to compare industries
or sectors in collection.
The analysis and understanding of financial statements is vital to bring in theenigma behind the
figures in financial statements. Financial statements analysis is an effort to find out the
importance and meaning of the financial statement data so thatprediction can may be made of the
future earnings, their ability to shell out interest and debt (bothongoing and long term) and
profitableness of a strong dividend policy.

TYPES OF FINANCIAL ANALYSIS:

FINANCIAL ANALYSIS

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On basis of materials used

On basis of modus operandi

External
Internal
Horizontal
Financial analysis are grouped into two different categories depending upon
analysis
analysis
analysis

Vertical
analysis

1) The material used and

2) The modus operandi of analysis (i.e.) the method of operation of operation followed
in the analysis.

1. On the basis of materials used: According to materials used, financial analysis can be of
two kinds
External analysis
Internal analysis

External analysis:
This analysis is done by 3rd party who do not have access to the detailed internal data.
Outsiders include investors, Creditors, Potential investors, Potential Creditors, Credit Agencies,
Government Agencies and General Public. For financial analysis, these outside parties to the
firm depend entirely on the published financial statements.
Internal analysis:
This analysis is done by the persons namely directors, Managers, Executives and
employees of the organization or by the officers assigned by government or court who have

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access to the books of account (internal accountancy records) and other information relevant to
the business.
2. On the modus operandi basis:
According to the financial analysis by modus operandi there are two types

Horizontal analysis
Vertical analysis

Horizontal analysis:
Horizontal analysis denotes the comparisons made on the financial data of a company for
a number of years. The data for this type of analysis are displayed horizontally over a number of
columns. The data of the various years are compared in contrast with a standard or base year, a
base year is year selected as beginning point. This kind of analysis is also known as dynamic
analysis ' as it is based on the information from year to year rather than on information of any
one year. The horizontal analysis makes it likely to focus attention on factors that have
transformed significantly during the period.
Vertical analysis:
Vertical analysis relates to the study of association of the various items in the financial
statements for one accounting period. In this form of analysis the data from financial statement
of a year are compared with a base picked out from the exact same year's statement.
Methods of financial analysis:
1.
2.
3.
4.
5.
6.

Common-size statements
Comparative statements
Trend analysis
Fund flow analysis
Ratio analysis
Cash flow analysis

Comparative statements:
The comparative financial statements are reports of the financial position at different
intervals of time. Comparative Statement gives an idea of financial state at two or more periods.
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Generally two financial statements (income statement and balance sheet) are prepared in
comparative form for financial analysis.
The comparative statement shows the following:1.
2.
3.
4.

Absolute data in terms of percentages.

Increase or decrease in terms of percentages.
Absolute figures (rupee amounts)
Changes in absolute figures (i.e.) increase or decrease in absolute figures.

The Two Comparative Statements Are:

I.

Comparative balance sheet

Income statement
Comparative balance sheet:

The comparative balance sheet analysis is the study of the trend of the same items, collection of
items and computed items in two or more balance sheets of the same business enterprise on
different dates. The change in periodic balance sheet items reflect the conduct of a business the
change can be observed by comparison of the balance sheet at the beginning and at the closing
period, these modifications can help in creating an opinion about the progress of an enterprise.
Guide Lines for Interpreting Comparative Balance Sheet:While interpretation of comparative balance sheet the interpreter is expected to examine
the following aspects:1. Current financial position and liquidity position.
2. Profitability of the concern.
3. Long term financial position.
Common Size Statement:The common-size statements, income statement and balance sheet are shown in analytical
percentages. The data's are shown as percentages of total assets, total liabilities and total sales.
The entire assets are taken as 100 % and various assets are attributed as a proportion of the total
similarly, various other liabilities are taken as a integral part of total liabilities.

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Common Size Balance Sheet:A statement which balance sheet items are expressed as the ratio of every asset to overall assets
and the ratio of every single liability is expressed as a ratio of total liabilities is called common
size balance. The common size balance sheet can be used to compare companies of varying size.
The comparison of figures in different periods is not useful because total figures may be affected
by a number of elements. It is not feasible to establish standard norms for different assets. The
trends of figures from year to year may not be studied and even they may not give proper results.
Trend Analysis of Balance sheet:
Trend analysis is Very important tool of horizontal financial analysis. This analysis enables to known the
change in the financial function and operating efficiency in between the time period chosen. By studding
the trend analysis of each item we can know the direction of changes and based upon the direction of
changes, the options can be changed.
Trend =Absolute Value of item in the statement understudy *100Absolute Value of same item in the base
statement.

Ratio Analysis:
Ratio analysis is used as a technique of analyzing the financial information, contained in the
balance sheet and profit and loss accounts, for a more meaningful understanding of the financial
position and performance of a firm.
The relationship between two accounting figures, expressed mathematically, is known as a
financial ratio. A ratio helps the analyst to make qualitative judgment about the firms financial
position and performance.
Several ratios can be calculated from the accounting data contained in the financial statements.
The parties which generally undertake financial analysis is shortterm creditors, long-term
creditors, owner and management. In view of the requirements of the various ratios, ratios are
classified into the following four important categories.

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Types:

Liquidity ratios
Leverage ratios
Activity ratios
Profitability ratios

Liquidity Ratios:
It is extremely essential for a firm to be able to meet its obligations as they become due.
Liquidity ratios measure the ability of the firm to meet its current obligations. A firm should
ensure that it does not suffer from lack of liquidity, and also that it does not have excess liquidity.
The failure of a company to meet its obligations due to lack of sufficient liquidity, will result in a
poor creditworthiness, loss of creditors confidence, or even in legal tangles resulting in the
closure of the company. A very high degree of liquidity is also bad idle assets earn nothing. The
firms funds will be unnecessarily tied up in current assets.
Therefore it is necessary to strike a proper balance high liquidity and lack of liquidity. The most
common ratios which indicate the extent of liquidity or lack of it are
Current ratio
Quick ratio
Other ratios include Cash ratio, Interval Measure and Net working capital ratio.
Current Ratio:
The current ratio is calculated by dividing current assets by current liabilities.
Current assets
Current ratio =

-------------------------Current liabilities

Current ratio is a measure of the firms short term solvency. It indicates the availability of current
assets in rupees for every one rupee of current liability. A ratio of greater than one means that the
firm has more current assets than current claims against the, Current ratio of2 to 1 or more is
considered satisfactory. Current ratio represents a margin of safety for creditors.

Quick Ratio:

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Quick ratio also known as acid-test ratio establishes a relationship between quick assets and the
current liabilities. Cash is the most liquid asset. It is calculated by dividing quick assets by
current liabilities.
Quick ratio = Quick Assets / Current Liabilities
Quick Assets = Current assets Inventory
One defect of the current ratio is that it fails to convey any information on the composition of the
current assets of the firm. A rupee of cash is considered equivalent to a rupee of inventory of
receivables. But it is not so. A rupee of cash is more readily available to meet current liabilities
than a rupee of say inventory. This implies the usefulness of the current ratio.
The Acidtest ratio measures the firms ability to convert its current assets quickly into cash in
order to meet its current liabilities.
A quick ratio of 1 to 1 is considered to represent a satisfactory current financial condition. It is an
important index of the firms liquidity.

Leverage Ratios:
Leverage ratios identify the source of a firms capital owners or outside creditors. Financial
leverage refers to the use of debt in financing non-current assets. If the return on assets exceeds
the cost of debt, the leverage is successful i.e., it improves return on equity.

DebtEquity Ratio:
The Debt Equity is determined to analyze the soundness of the long term financial policies of
the organization. It is also known as Internal External Equity Ratio.
It is calculated as follows:
Debt Equity Ratio = Total long term debt / Shareholders funds.
Equity Ratio:
This ratio is also called as proprietary ratio establishes a relationship between shareholders
funds to total assets of company. Equity Ratio is calculated by dividing shareholders fund by
total assets.
Fixed Asset Ratio:

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This ratio indicates the extent to which the assets of the companies can be lost without affecting
the interest of the creditors of the company. Higher the ratios better the long-term position of the
company.
Activity Ratios:
They are primarily used for studying a firms working capital situation. A well-managed firm
should have good activity ratios.
Working Capital Turnover Ratio:
The working capital turnover ratio indicates whether or not working capital has been effectively
used in making sales.
Working capital turnover = Sales / Net current assets
Inventory Turnover Ratio:
This ratio also known as Stock Turnover Ratio establishes the relationship between costs of
goods sold or net sales during the given period and the average amount of stock held during the
period. This ratio reveals the number of times finished stock in turnover during a given
accounting period.
Higher the ratio the better is it because it shows the finished stock is rapidly turned in to sales.
On the other hand, a low stock turnover ratio is not desirable, because it reveals the accumulation
of stock.

Debtors Turnover Ratio:

This ratio indicates the velocity of debt collection of a company. In other words it shows the
number of times average turnover during a year.
A Higher Debtor Turnover Ratio indicates a more efficient is the management towards debtors
and low ratio implies inefficient management of debtors.
Total Assets Turnover Ratio:
The asset turnover ratio indicates how efficiently management is employing Assets.
Total Assets Turnover Ratio = Sales / Total Assets
Profitability Ratios:

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Profitability ratios are the ratios which measure a firms overall effectiveness as revealed bythe
returns generated on sales and investment.
General Profitability Ratios:
1. Gross Profit Ratio
2. Net profit Ratio
3. Operating or Expenses Ratio.

Gross Profit Ratio:

Gross profit Ratio measures the relationships to net sales and is usually represented as a
percentage. It is a good measure of profitability. The gross profit ratio indicates the extent to
which selling price of goods per unit may decline without resulting in losses on operation.
Higher the gross profit betters the result.
Net Profit Ratio:
Net Profit Ratio indicates net margin on sales. It is given by the following equation.
Net Profit Ratio = (Net Profit / Sales) * 100

Operating or Expenses Ratio:

This ratio is complimentary of Net Profit Ratio. The more the net profit is the lesser the operating
ratio. Operating costs include the cost of direct materials, direct labors and other overheads, viz.,
are generally excluded from operating costs. A comparison of the Operating ratio will indicate
whether the cost efficiency is high or low in the figure of sales. This less the ratio it depicts the
efficiency of the management.

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CHAPTER III
3.1. INDUSTRY PROFILE
The automotive industry in India is one of the largest markets in the world and had previously
the best one of fastest growing globally, but is now seeing flat or negative growth rates. Indias
passenger car and commercial vehicle manufacturing industry is the sixth largest in the world,
with an annual production of more than 3.9 million units in 2011. According to recent reports,
India overtook Brazil and became the sixth largest passenger vehicle producer in the world
(beating such old and new automakers as Belgium, United Kingdome, Italy, Canada, Mexico,
Russia, pain, France. Brazil grew 16 to 18 percent to sell around three million units in the course
of 2011-12. In 2009, India emerges as Asias fourth largest exporter of passenger cars, behind

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Japan, South Korea and Thailand. In 2010, India beat Thailand to become Asias third largest
exporter of passenger cars.
As of 2010, India is home to 40 million passenger vehicle. More than 3.7 million automotive
vehicles were produced in India, in 2010 (an increase of 33.9%) making the country the second
(after china) fastest growing automobile market in the world during the year. According to the
society of Indian Automobile manufacturers annual vehicle sales was projected to increase by
four million 2015, no longer than five million as previously projected.
The majority of Indias car manufacturing industry is based around three clusters in the south,
West and north. The southern cluster consisting of Chennai is the biggest one with 3% of revenue
share. The western hub near Mumbai and Pune contributes to 33% of the market and northern
cluster around the National Capital region contributes 32%. Chennai with the Indian operation of
Ford, Hyundai, Renault, Mitsubishi, Nissan, BMW, Hindustan motors, Caparo and PSA is about
to begin their operation by 2014. Chennai accounts for 60% of the countrys automotive exports.
Gurgaon and Mimesar in Haryana form the northern cluster where the countrys largest car
manufacturer Maruti Suzuki is based.
The chukan corridor near pune, Maharashtra in the western cluster with companies like general
motors, Volkswagen, Skoda, Mahindra and Mahindra, Tata motors, Mercedes Benz, Land Rover,
Jaguar cars, Flat and force Motors having assembly plants in the area. Nasik has a major base of
Mahindra and Mahindra with a UV assembly unit and an engine assembly unit. Aurangabad with
Audi, Skoda and Volkswagen also forms part of the western cluster. Another emerging cluster is
in the state of Gujarat motors in Halol and further planned for Tata Nano at their plant in Sanand.
Ford, Maruti Suzuki and Peugeot. Citron plants are also set to come up to Gujarat. Kolkata with
Hindustan Motors, Noida with Honda and Bangalore with Toyota are some of the other
automotive manufacturing regions around the country.
The first car ran on Indias road in 1897. Until the 1930s car were imported directly, but in very
small numbers. An embryonic automotive industry emerged in India during 1940s. Mahindra and
Mahindra were established by two brothers as a trading company in 1943, and began assembly of
jeep CJ-3A utility vehicles.
Following the Independence, in 1947, the government of India and the private sector launched
efforts to create automotive component manufacturing industry to supply to the automotive
industry. However the growth was relatively slow in the 1950s and 1960s due to nationalism and
the license raj which hampered the Indian private sector. Total restriction for import of vehicles
was set and after 1970 the automotive industry started to grow, but the growth was mainly driven
by tractors, commercial vehicles and scooters.
Cars were still a major luxury. Eventually multinational automakers, such as, though not limited
to, Suzuki and Toyota of Japan and Hyundai of South Korea, were allowed to invest in the Indian
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market ultimately leading to the establishment of an automotive industry in India. A number of

foreign firms also initiated joint ventures with Indian companies.
The automotive industry in India is now working in terms of the dynamics of an open market.
Many joint ventures have been set up in India with foreign collaboration. India ranks just behind
China with the Worlds second population at over 1 billion people. Less than 1% of the Southeast
Asia region. India also has one of the fastest growing economics and many U.S. companies
viewed India as a potentially lucrative market.
Indian Automotive Industry growth started in the 1970s. Between 1970 and 1984 cars were
considered as luxurious product; manufacturing was licensed, expansion was restricted; there
were quantitative restriction (QR) on imports and tariff structure designed to restrict the market
but starting in 2000. Several landmarks policy changes like QR and 100% FDI through
automotive route was introduced. In 2003, cove group of automotive R&D (C.A.R) was set up to
identify priority areas for automotive R&D in India.
The evolution of the automotive component industry predictably followed the evolution of the
auto industry itself. With the startup of local production of cars, trucks and two wheelers in
1950s, many of the associated component manufacturers (mainly from Europe) started
operations in India, over a period of time, many of the major manufacturers has established the
plants for manufacturing the assembly of plants.

3.2 COMPANY PROFILE

INTRODUCTION:
Mitsubishi Heavy Industries Ltd (Japan) is one of the worlds leading manufacturers of
gear cutting machine, large machine centres and Gear Cutting tools, and Broaches the pioneer in
introducing the latest Super Dry technology in gear cutting. Mitsubishi Heavy Industries Ltd
(Japan) acquired S.R.P Tools Ltd, a 42 year old company and the leaders in manufacturer of gear
cutting tools and broaches in the country, in May 2005 and thus Mitsubishi Heavy Industries
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India Precision Tools Limited (MHI-IPT) was formed. This unit is now functioning as a
subsidiary of Mitsubishi Heavy Industries Limited, Japan.

ABOUT MITSUBISHI:
Mitsubishi Heavy Industries Ltd.(Japan) is one of the World's leading manufacturers of
gear cutting machines, large machining centres and gear cutting tools, and the pioneer in
introducing the latest 'Super Dry' technology in gear cutting.
Mitsubishi Heavy Industries Ltd.(Japan) acquired S.R.P Tools Ltd., a 42 year old company and
the leader in manufacturer of gear cutting tools and broaches in the country, in May 2005 and
thus Mitsubishi Heavy Industries India Precision Tools Limited(MHI-IPT) was formed. This
Unit is now functioning as a subsidiary of Mitsubishi Heavy Industries Limited, Japan.
S.R.P Tools Limited was started in the year of 1965. It started first factory at Chennai, India for
manufacturing conventional cutting tools. It signed an agreement with Mitsubishi Heavy
Industries, Ltd-Japan for the technical collaboration to manufacture gear cutting tools and
broaches in the year of 1972.
S.R.P Tools Limited's second factory was started at Ranipet in the year of 1974 for the
production of Hobs, Shaper cutters and Broaches. Later, it started manufacturing of Gear
Shaving Cutters, Rotary cutters for straight bevel gears and Master Gears.
SRP Tools Limited obtained ISO 9001-1987 certification in 1994 and India's first unit to obtain
ISO 9000 certification for Gear Cutting Tools and Broaches. It added CNC machines for profile
grinding of Hobs, Shaper cutters and Broaches.
In 2005, S.R.P Tools Limited was acquired by Mitsubishi Heavy Industries, Ltd-Japan.
After acquiring SRP Tools Limited, MHI-IPT expanded its plant capacity in 2007-08 by adding
many CNC machines and conventional machines, to make more than double its production
capacity to cater to the needs of its customers.
MHI-IPT is now India's largest manufacturer of Gear Cutting Tools and Broaches, featuring the
most advanced precision technologies and commanding the largest market share. Its product
range includes Gear Hobs, Gear Shaping Cutters, Gear Shaving Cutters, Master Gears, Rotary
Cutters, Spine Broach and various other types of Broaches, used in manufacturing of various
automotive and engineering components.
MHI-IPT draws upon MHI Japan's strengths in the use of advanced materials technology and its
knowledge base as MHI Japan is the only manufacturer of gear cutting tools, who also
manufactures machines to produce these gear cutting tools, as well as the gear cutting machines
on which they are consumed, to produce gears for the automotive industry.
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3.3 COMPANY PRODUCTS

Gear Hobs

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Module, DP and CP series Hobs are supplied by MHI-IPT.

Various forms of Hobs such as non-topping, semi-topping, topping, finishing, roughing, preshaving or pre-grinding, with or without protuberance, tip relief , full fillet radius etc., are

manufactured.
Multi start Hobs, Multi gash Hobs and Dry cut Hobs are also supplied.
Designing & Production of Gear Hobs-both involute and parallel sided, Sprocket Hobs,
Worm Wheel Hobs, Serration Hobs, Timing Belt Pulley Hobs and Ratchet Hobs are done at

MHI-IPT. They are either custom-made or to suit international Standards.

Both bore type and shank type Hobs are made.
Hob material is generally AISI M35 (6-5-2+5%Co). On special request, Hobs made in
powder material (ASP 2030, ASP 2052) and TiN, TiAlN, TiCN and AlcronaPro coated

Hobs.
Normally, accuracy classes are as per DIN 3968 Standard AA, A & B. However, Hobs are
made to suit other accuracy Standards also.

Gear Shaping Cutters

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Module, DP and CP series Shaper Cutters are supplied by MHI-IPT

Various forms of Shaper cutters such as non-topping, semi-topping, topping, finishing,

roughing, pre-shaving or pre-grinding, with or without protuberance, etc., are manufactured

Both spur type and helical type Gear Shaping cutters are made
Designing and Production of relief ground Shaping cutters for involute splines, worms (cutter
to be used in hobbing machine by kinematics inversion process) and relief machined cutters

for sprocket, parallel sided splines etc., are done at MHI-IPT

The range of Shaping cutters available at MHI-IPT includes different varieties of disc type,

hub type and shank type. Tandem Shaping cutters are also supplied
Shaper cutter material is generally AISI M35 (6-5-2+5%Co). On special request, Shapers
made in powder material (ASP 2030, ASP 2052) and TiN, Ti AIN, Alcrona Pro coated

Shapers are supplied

Normally, accuracy classes are as per DIN 1829 Standard AA,A. However Shaper cutters are
made to suit other accuracy Standards also.

Gear Shaving Cutters

26 | P a g e

Manufacturing of various types of Shaving cutters such as conventional, diagonal, under-pass

and plunge-cut are undertaken

Special profiles are incorporated on the Cutter to generate tip relief, profile crowning, lead

crowning, etc., on component

The Shaving machine at MHI-IPT tries out the Shaving cutter manufactured here, to confirm
the profile accuracy. This is done at extra cost with necessary mandrels, component blanks,

etc., supplied by the customer

Pre-shaved tools like Hobs/Shaping cutters along with Shaving cutters can be supplied from
a single source - MHI-IPT. Hence, design parameters can be worked out to achieve optimum

results on the components

Gear Shaving cutters made out of superior HSS Grades can be supplied.
Re-sharpening of MHI-IPT make cutters as well as imported cutters are carried out.
Customers have to furnish the re-sharpening chart along with other make and imported
cutters.

Master Gears

27 | P a g e

It is used on double flank roll-testing machine to confirm the Gear accuracy

To improve the life of Master Gears, we manufacture the same out of HSS material and

hardness is maintained above 63 HRC

We can manufacture Master Gears in Quality Class 4 & 5 of DIN 3962.
We can also manufacture Taper Bore and OBD Master Gears.

28 | P a g e

BROACH

Broaches are made to suit component specifications, customer's machine and holder
details.
Different internal profiles are undertaken for manufacture of Splines-Involute, parallel and trapezoidal
Serrations
Round
Rectangular
Ratchet, etc.
Different types of broaches are supplied Burnishing for round holes
Only spline
Plain combination round and spline
Interspaced round and spline.
Full form Gear Broaches.
Pull end /Rear end details
Sleeve type as per DIN 1415 or DIN 1417 Standard
Cotter type
Any other type to suit the customers' holder details
Equipped to manufacture and supply Surface Broaches for plain and curved profiles

29 | P a g e

Other Products

Rotary Cutter For Straight Bevel Gears

Cutters are supplied in pairs

At present, we supply cutters made out of High Speed Steels of Grade M2 (conventional)
or ASP 2023 (powder material)

These cutters have 9" diameter, 4.5" bore and 0.5" thickness

Rack Milling Cutters (Ground Form)

This cutter is used to produce racks.

We can supply either with straight gash or helical gash.

We can supply cutters upto diameters 280mm & Overall length 300mm

Cutters

are

offered

in

various

High

Speed

M35(conventional),ASP 2030 & ASP 2052(Powder materials)

30 | P a g e

Steel

of

Grades

like

AISI

Swaging Cutters

These cutters are used to produce taper flanks in external splines or internal splines.

Most of the synchromesh gear boxes require taper splines which are formed by this
process.

External splines are produced by hobbing or shaping process. Then, these swaging cutters
are used on special purpose machines to obtain taper flanks.

Internal splines are produced by broaching or shaping process. Then these swaging
cutters are used on a special purpose machines to get taper splines.

Chamfering Cutters

These cutters are used to produce chamfers along involute profile of gears at end faces.

Normally, it is used after gear cutting by hobbing or shaping process.

Cutters are supplied in pairs and to suit gear profile.

Deburring Cutters

These cutters are used on gear chamfering machines to deburr while chamfering
operation is carried out.

31 | P a g e

CHAPTER IV
ANALYSIS AND INTERPRETATION

TREND ANALYSIS: Share Capital

Year

Amount
(in Crores)

Trend %

Increase

Decrease

Base year

Previous year

2011

6970000

100

2012

6970000

100

2013

6970000

100

Fig 4.1
120
100
80
Amount

60

Trend %
40
20
0
2011

2012

2013

Trend Percentages in Share Capital:

Share capital shown a constant trend in the period 2011 and 2013.
Share capital is 6.97 crores all the years from 2011-2013.

32 | P a g e

Reserves & surplus:

Year

Amount
(in Crores)

Trend %

Increase

Decrease

Base year

Previous year

2011

83,79,72,425

100

2012

94,68,10,382

112.99

12.99

12.99

2013

100,65,72,820

120.12

20.12

7.13

Fig 4.2
140
120
100
80

Trend %

60
40
20
0

Trend Percentages in Reserves & Surplus:

Reserves & surplus shown an increasing trend in the period between 2011 and 2013.
The average trend was 112.99 % till 2012.
The Reserves & surplus was showing increasing trend in the period 2011-2013 (i.e. from
100 % in 2011 to 120.12 % in 2013).
The increasing trend in Reserves & surplus indicates the increase in profits of thefirm.

33 | P a g e

Net current Assets:

Net Current Assets

Year

Amount
(in Crores)

Trend %

Increase

Decrease

Base year

Previous year

2011

55,59,05,612

100

2012

60,16,66,366

108.2317

8.23

8.23

2013

65,57,46,729

117.9601

17.96

9.73

Fig 4.3

120
115
110
Trend %
105
100
95
90

Trends in Net Current Assets:

The NCA shown positive (increasing) trend.

The NCA are increased to 117.96 % (the year 2013) compared with base year and
The NCA shown increased trend from year and crossed 100 %.
The overall trend was good.

34 | P a g e

Quick Assets:
Quick Assets
Year

Amount
(in Crores)

Trend %

Increase

Decrease

Base year

Previous year

2011

468495011

100

2012

495996571

105.87

5.87

5.87

2013

537872567

114.81

14.81

8.94

Trend %
115
110
105
100
95
90

35 | P a g e

Trend %

Ratio Analysis:

i.

Current Ratio
Current ratio = (Current assets / current liabilities)

Year

Current Assets

Current Liabilities

2010-11
2011-12

55,59,05,612
60,16,66,366

6,22,56,311
6,29,10,555

2012-13

65,57,46,729

7,92,00,488

Current Ratio
8.93
9.56
8.28

Fig: 4.4

Current Ratio
10
9.5
Current Ratio
9
8.5
8
7.5

Interpretation of current ratio:

As per the standard rule of current ratio i.e., 2:1 where current assets double the current liabilities
is considered satisfactory. In the present analysis the current ratio of the Mitsubishi is not
satisfactory from the above table. It was assessed that the current ratio for all the five year is

36 | P a g e

lower (less) than the standard rule i.e., 2:1. And it is 8.28 in the year 2012-2013. This is highly
unsatisfactory because it has gone down.

ii.

Quick Ratio:

Quick ratio also known as acid-test ratio establishes a relationship between quick assets and the
current liabilities. Cash is the most liquid asset. It is calculated by dividing quick assets by
current liabilities.

Quick ratio = Quick Assets / Current Liabilities

Quick Assets = Current assets Inventory
Quick Assets
Year

Amount
(in Crores)

Trend %

Increase

Decrease

Base year

Previous year

2011

468495011

100

2012

495996571

105.87

5.87

5.87

2013

537872567

114.81

14.81

8.94

Fig 4.5

Interpretation for Quick ratio:

Usually a high Quick ratio is an indication that the company is liquid and has the ability to meet
its current or liquid liabilities in time on the other hand a high Quick Ratio represents that the
companys liquidity position is good. The above table showing the quick ratios of Mitsubishi is
considered satisfactory.

37 | P a g e

115
110
105

Trend %

100
95
90

Leverage Ratios:iii.

Debt Equity Ratio

Debt Equity Ratio = Total long term debt / Shareholders funds.
Total Long term Debt= Debenture Capital + Long term loans from banks and financial
Institutions + Public deposits.
Equity Share Holders fund = Equity + Reserves and Surplus.

Debt equity
Year

Total Debt

Shareholders Fund

Debt Equity Ratio

2011

65122346

90,76,72,425

0.07

2012

67301525

101,65,10,382

0.07

2013

84342351

107,62,72,820

0.08

38 | P a g e

Interpretation of Debt Equity ratio:

The Debt-Equity Ratio accepted standard is 0.5. This ratio reflects the relative contribution of
creditors and owners of business in its financing. From the above it is clear that the long term
debt is more than that of the share holders fund. So we can interpret that the firms assets are
financed more by the external funds rather than by the internal funds.

Debt Equity ratio

0.08
0.08
0.08
0.07
0.07
0.07
0.07
0.07
0.06
0.06
0.06
2010-11

iv.

Debt Equity ratio

2011-12

2012-13

Fixed Asset turnover ratio

Fixed asset ratio = Net sales / Net Assets
Fixed asset turnover ratio
Year

Net sales

Net assets

Fixed assets ratio

2011

585457655

972794771

0.60

2012

679062426

1083811907

0.63

2013

694757044

1160615171

0.60

39 | P a g e

Interpretation of Fixed Asset turnover ratio:

This ratio indicates the extent to which the assets of the companys can be lost without affecting
the interest of the creditors of the company. Higher the ratios better the long-term position of the
company. The table shows a decline in the ratio, is this good for the company?

Fixed turnover ratio

0.63
0.63
0.62
0.62
0.61
0.61
0.60
0.60
0.59
0.59
0.58
2010-11

40 | P a g e

Fixed turnover ratio

2011-12

2012-13

Overall Profitability Ratios:v.

Net profit ratio:

It establishes a relationship between net profits after tax and net sales, and indicates the
efficiency of the management in manufacturing, selling, administrative and other activities of the
company. Net Profit Ratio indicates net margin on sales. It is given by the following equation.
Net Profit Ratio = (Net Profit / Sales) * 100
Net profit
Year

Net profit

Net sales

Net profit ratio

2011

100179116

585457655

17.11

2012

130141698

679062426

19.16

2013

80833641

694757044

11.63

Interpretation of Net profit ratio:

The higher the ratio the better is the profitability or performance of the business.
The above table depicts the net profit Ratio of Mitsubishi has increased between year from 20112012 but declined in 2012-2013. This shows a decrease in the profits of the company.

Net profit ratio

25.00
20.00
15.00

Net profit ratio

10.00
5.00
0.00
2010-11

41 | P a g e

2011-12

2012-13

vi.

Return on investment:
Return on investment = (Net profit / shareholders fund ) * 100

Return on inv
Year

Net profit

Shareholders fund

Return on inv

2011

100179116

90,76,72,425

11.04

2012

130141698

101,65,10,382

12.80

2013

80833641

107,62,72,820

7.51

Interpretation on Return on Investment:

The above table reveals how well the resources of the firm are being used. Higher the ratios
better the result. The above ratio implies how well the firm is growing in terms of profitability
and efficiency. From the above table we can concern that the return on investment is in
decreasing trend. ROI is highest in the year 2012 as 12.80 %. But there after its decreased every
year.

Return on investment
14.00
12.00
10.00
Return on investment

8.00
6.00
4.00
2.00
0.00
2010-11

42 | P a g e

2011-12

2012-13

vii.

Return on capital:

Return on capital
Year

PBIT

Capital employed

Return on capital
employed ratio

2011

100613083

972794771

10.34

2012

130264673

1083811907

12.02

2013

80833641

1160615171

6.96

Interpretation on Return on capital:

The above table depicts return on Equity Capital Employed Ratio of Mitsubishi has increased
from 2012-2013. It further decreased to 6.96 in the year 2012-2013 which shows constant
fluctuation in the returns of the company.

Return on Capital employed

14.00
12.00
10.00

Return on Capital
employed

8.00
6.00
4.00
2.00
0.00
2010-11

43 | P a g e

2011-12

2012-13

Common Size Balance sheet of Mitsubishi for the year 2011, 2012 and 2013

Common size
Particulars
Liabilities
Share Capital
Reserves and
surplus
Loans
Deferred Tax
Liabilities
Current Liabilities
Total liabilities
Assets
Net Block
Capital WIP
Investments
Current Assets
Inventories
Sundry Debtors
Cash and Bank
Balances
Loans and
Advances
Other Current
assets
Total assets

44 | P a g e

2011

69700000
837972425

Change
Percentage
7.16
86.14

2012

69700000
946810382

Change
Percentage

2013

6.43
87.36

69700000
1006572820

Change
Percentage
6.01
86.73

2866935

0.29

4390970

0.41

5141863

0.44

62256311
972794771

6.40
100

62910555
1083811907

5.80
100

79200488
1160615171

6.82
100

409038113
0
11351046

42.05
0
1.17

419091610
44416507
18637424

38.67
4.10
1.72

461447059
19880279
23541104

39.76
1.71
2.03

87410601
130642083
311937427

8.99
13.43
32.07

105669795
123954880
336347386

9.75
11.44
31.03

117874162
130721961
343690789

10.16
11.26
29.61

20124108

2.07

21293570

1.96

24279523

2.09

5791396

0.60

14400735

1.33

39180294

3.38

972794771

100

1083811907

100

1160615171

100

Interpretation of Common Size Balance Sheet of 2011-2012:

Share capital was recorded 7.16 percent in the total liabilities in the year 2011 it is
decreased to 6.43 % in the year 2012.
Reserves & surplus contributed to 86.14 % in the total liabilities in the year 2011 it is
increased to 87.36% in the year 2012.
Current Liabilities shown to 6.40 % in the total liabilities in the year 2011 it is
Also 5.80 % in the year 2012.
Fixed Assets were 42.05 in the total liabilities in the year 2011 i.e., decreased to 38.67 %
in the year 2012.
Investments were 1.17 in the total liabilities in the year 2011 it increased to 1.72 % in
the year 2012.
Sundry debtors were 13.43 in the total liabilities in the year 2011 it decreased to 11.44 %
in the year 2012.

45 | P a g e

Interpretation of Common Size Balance Sheet of 2012-2013:

Share capital was recorded 6.43 percent in the total liabilities in the year 2012 it is
decreased to 6.01 % in the year 2013.
Reserves & surplus contributed to 87.36 % in the total liabilities in the year 2012 it is
decreased to 86.73% in the year 2013.
Current Liabilities shown to 5.80 % in the total liabilities in the year 2012 it is
also 6.82 % in the year 2013.
Fixed Assets were 38.67 in the total liabilities in the year 2012 i.e., increased to 39.76 %
in the year 2013.
Investments were 1.72 in the total liabilities in the year 2012 it increased to 2.03 % in
the year 2013.
Sundry debtors were 11.44 in the total liabilities in the year 2011 it decreased to 11.26 %
in the year 2012.

46 | P a g e

47 | P a g e

Comparative balance sheet 2011-2012

Particulars
Liabilities
Share Capital
Reserves and surplus
Loans
Deferred Tax Liabilities
Current Liabilities
Total liabilities

2011

2012

Change
(in rupees)

Change( in
Percentage )

69700000
837972425

69700000
946810382

0
108837957

0
12.98

2866935
62256311
972794771

4390970
62910555
1083811907

1524035
654244
111017136

53.15
1.05
11.41

Assets
Net Block
Capital WIP
Investments
Current Assets
Inventories
Sundry Debtors
Cash and Bank Balances
Loans and Advances
Other Current assets

409038113
0
11351046

419091610
44416507
18637424

10053497
44416507
7286378

2.45
64.19

87410601
130642083
311937427
20124108
5791396

105669795
123954880
336347386
21293570
14400735

18259194
-6687203
24409959
1169462
8609339

20.88
-5.11
7.82
5.81
148.65

Total assets

972794771

1083811907

111017136

11.41

Interpretation of comparative balance sheet of 2011-2012:

48 | P a g e

Reserves & surplus increased to 12.98 % i.e., in Rupees 1.088 Crores.

Current Liabilities were increased to 1.05 % i.e., in Rupees 6.54 lakhs, and
Fixed Assets were increased to 2.45 % i.e., in Rupees 1.05 Crores.
Investments were increased to 64.19 % i.e., in Rupees 0.72 Crores.
Sundry debtors were decreased to 5.11 % i.e., in Rupees 0.66 Crores.
Total assets increased to 11.41 % i.e., in Rupees 11.10 Crores. And loans and
Advances increased 53.15 % i.e., in Rupees 15.24 Lakhs.
The overall financial position was satisfactory.

49 | P a g e

Comparative balance sheet 2012-2013

Particulars
Liabilities
Share Capital
Reserves and surplus
Loans
Deferred Tax Liabilities
Current Liabilities
Total liabilities
Assets
Net Block
Capital WIP
Investments
Current Assets
Inventories
Sundry Debtors
Cash and Bank Balances
Loans and Advances
Other Current assets
Total assets

2012

2013

Changes
(in rupees)

69700000
946810382

69700000
1006572820

0
59762438

0.00
6.31

4390970
62910555
1083811907

5141863
79200488
1160615171

750893
16289933
76803264

17.10
25.89
7.09

419091610
44416507
18637424

461447059
19880279
23541104

42355449
-2.5E+07
4903680

10.11
-55.24
26.31

105669795
123954880
336347386
21293570
14400735

117874162
130721961
343690789
24279523
39180294

12204367
6767081
7343403
2985953
24779559

11.55
5.46
2.18
14.02
172.07

1083811907

1160615171

76803264

7.09

Comparative balance sheet 2012-2013

50 | P a g e

Changes
( in Percentage )

Reserves & surplus increased to 6.31 % i.e., in Rupees 5.97 Crores.

Current Liabilities were increased to 25.89 % i.e., in Rupees 1.62 Crores, and
Fixed Assets were increased to 10.11 % i.e., in Rupees 4.23 Crores.
Investments were increased to 26.31 % i.e., in Rupees 0.49 Crores.
Sundry debtors were increased to 5.46 % i.e., in Rupees 0.67 Crores.
Total assets increased to 7.09 % i.e., in Rupees 7.68 Crores. And loans and
Advances increased 17.10 % i.e., in Rupees 7.5 Lakhs.
The overall financial position for 2012-2013 shows growth better than period of 2011

2012.

51 | P a g e

CHAPTER V
FINDINGS AND SUGGESTIONS

5.1 FINDINGS:
The Share capital remains constant. Share capital is unchanged all the years from 20112013.
Reserves & surplus were recorded an increasing trend in the period between 2011 and
2013. The Reserves & surplus was showing increasing trend in the period 2011-2013 (i.e.
from 100 % in 2011 to 120.12 % in 2013).
Current Liabilities were increased compared to base year i.e. 2011.
The current ratio for all the three years is lower (less) than the standard rule i.e., 2:1.
And it is 8.28 in the year 2012-2013.
The Debt-Equity Ratio was shown under the standard ratio. It is clear that the long term
debt is more than that of the share holders fund. It indicates that the firm heavily relying
on external funds rather than the internal funds.
The operating and net profit ratio of Mitsubishi, ranipet is in decreasing trend due to
heavy increase of manufacturing & administrative expenses.
ROI is highest in the year 2011-20012 as 12.80 %. The ROI is less in the years
2012-2013 and 2010-2011 as 7.05 & 11.05 respectively.
Return on Equity Capital Employed Ratio of Mitsubishi, ranipet has increased during the
year 2011-2012. It further decreased in the year 2012-13 to 6.96.

5.2 SUGGESTIONS:

52 | P a g e

 The organization should adopt an appropriate capital structure.

The companys debt-equity ratio is recorded more or less as 0.7 in the year 2012 and it is
increased to 0.8 in the year 2013. The company should adopt a better debt equity mix in
the future to decrease the fluctuations in returns.
The company should control fluctuations in cash and bank balances as it impacts the
current ratio of the company.
The company should control heavy increase of manufacturing & administration expenses
as it is impacting the operating and net profit of company.

5.3 CONCLUSION

The project entitled A Study on financial Performance of Mitsubishi Heavy Industries India
Precision Tools Limited was undertaken with the objective of financial performance and to
examine profitability performance of the company. From the study, Gross Profit and Net profit
position was good. The liquidity position should be increased in the company. Long term
solvency position of company was satisfactory. The Overall Financial performance of Mitsubishi
Heavy Industries India Precision Tools Limited was good.

53 | P a g e

54 | P a g e

BIBLIOGRAPHY

Sl.
no
1
2
3

Books:

Author:

Financial Management
Financial Management
Management Accounting

Khan & Jain

I.M.Pandey
R.P.Trivedi

Journals:
1

Annual Report of Mitsubishi Heavy Industries India Precision Tools Limited year 20102011.

Annual Report of Mitsubishi Heavy Industries India Precision Tools Limited year 20112012.

Annual Report of Mitsubishi Heavy Industries India Precision Tools Limited year 20122013.

Websites:
http://www.mhi-ipt.in
http://www.moneycontrol.com
http://www.tofler.in

55 | P a g e